Archive for the ‘Government’ Category

The International Monetary Fund (IMF), in light of Belize’s poor economic outlook, offered Belize several recommendations in its latest report on the jurisdiction; however Prime Minister Dean Barrow has openly rejected most of their recommendations.

Responding to the IMF’s recommendations after its routine Article IV Consultation, Barrow emphasized that Belize would not be implementing the recommendations despite the IMF saying that the country’s medium term economic outlook was “weak”.

“There is absolutely no obligation on our part to follow any of it and certainly with respect to the recommendations as to raising the GST and as to doing away with exemptions and the recommendations having to do with pensions and public officers. We absolutely reject those. As we have made clear repeatedly,” Barrow told the media.

He added that Belize’s economic difficulties were only temporary problems.

The IMF recommended, among other things that GOB increase General Sales Tax (GST) from 12.5 to 15%, and that it increase revenue inflows from GST by removing the list of zero-rated goods. The fund estimates that each of the reforms could yield up to 1% of GDP. The IMF also recommended civil service reforms to address the amount paid out in pensions and the number of public servants, in an attempt to contain the country’s wage bill, which is the largest in the region. The IMF’s assessment said that Belize had high public debt, decreasing economic performance, and a lack of strict fiscal consolidation policies, low growth projections, and increased unemployment, which were major factors in the poor economic outlook. Also, the International Monetary Fund pointed to over USD 100 million in outstanding arbitration awards; and the withdrawal of corresponding banking relationships as issues that further brought the outlook down.

The International Monetary Fund (IMF) says that Belize should increase the General Sales Tax rate in order to cut its deficit.

According to the IMF, the jurisdiction should consider measures including broadening the base of the General Sales Tax (GST) and increasing its rate to the regional average of 15% (from 12.5%). It said that both steps could increase revenues by 1% of GDP (gross domestic product).

It was also indicated by the IMF that electronic tax filing and payment systems could also be enhanced, especially for GST and income tax, where less than 10% of registered taxpayers file or pay their taxes electronically.

In his March budget speech, Dean Barrow, Belize’s Prime Minister and Minister of Finance and Natural Resources, rejected the IMF’s “publicly rehearsed” advice to raise general sales tax (GST), ditch zero-rated treatment for certain products, cancel exemptions, and increase personal and business income taxes as “regressive and punitive to both citizens and enterprise.” He instead announced a series of “pro-poor and pro-people” reforms, which he said would increase revenues by 2.2% of GDP. These include a 10 percent income tax on statutory boards of “quasi government entities;” increasing the excise levy on aerated water, beer and stout, cement, and fuel; increasing the environmental charge on imported goods by 1%; and raising stamp duty on foreign exchange permits by 0.5%.

Belize has rejected International Monetary Fund (IMF) recommendations to raise taxes across the board in favor of more selective reforms that are proposed as less punitive to the jurisdiction’s businesses and poorest citizens.

In his budget speech the Prime Minister and Minister of Finance and Natural Resources, Dean Barrow, rejected the IMF’s “publicly rehearsed” advice to raise general sales tax (GST), ditch zero-rated treatment for certain products, cancel exemptions, and increase personal and business income taxes as these measures are “regressive and punitive to both citizens and enterprise.”

Instead of the above-mentioned, he announced a series of “pro-poor and pro-people” reforms, which he expected to increase revenues by 2.2% of GDP. These include a 10% income tax on statutory boards of “quasi government entities;” increasing the excise levy on aerated water, beer and stout, cement, and fuel; increasing the environmental charge on imported goods by 1%t; and raising stamp duty on foreign exchange permits by 0.5%.

According to Belizean officials, the jurisdiction is to announce wide-ranging tax hikes in its upcoming Budget in order to solve its fiscal woes.

In a recent interview, Belize’s Financial Secretary Joseph Waight said that the Government of Belize cannot rule out tax increases. In February, the Government said it was considering potential options for hikes. “We don’t know just yet, that’s still in the process we are going through but I think that at this point in time it is inevitable that there will be an increase in some taxes,” Waight said.

Waight also said that business leaders and unions have told the Government of Belize that it should first of all improve the efficiency of the tax administration and only after that look at tax hike options.